In this Friday, April 22, 2016 a marijuana bud is seen at a medical marijuana facility in Unity, Maine. Canopy Growth Corp. reported a $1.3-million loss in its latest quarter despite doubling its revenue compared with a year ago, sending its shares lower in early morning trading. THE CANADIAN PRESS/AP-Robert F. Bukaty

Pot companies gear up at home, cast global net in strong quarter: analysts

TORONTO — Canadian marijuana companies were riding high in the latest quarter as they ramped up production capacity ahead of the deadline for the legalization of recreational cannabis next summer while also extending their reach outside the country’s borders, analysts say.

Canopy Growth Corp. (TSX:WEED), Canada’s largest licensed marijuana producer, was the latest to report its second-quarter earnings, posting a $1.3-million loss attributable to shareholders, despite doubling its revenue compared with a year ago.

Still, its chief executive Bruce Linton told analysts Tuesday the company is “driving ahead” and taking actions now needed to position the company for the future, such as strategic partnerships in Denmark and Jamaica.

“The international opportunities are now increasingly happening,” Linton said on Tuesday’s conference call.

It was a strong quarter for Canadian cannabis companies, said Russell Stanley, an analyst with Echelon Wealth Partners, with many indicating they are on track and on budget with expansion plans ahead of the federal government’s July 2018 deadline for the legalization of recreational marijuana.

Still, as marijuana companies gear up for the domestic recreational market amid concerns of a supply shortage, many have also been laying the groundwork to benefit from future growth markets such as Germany and Brazil, he said.

“Specifically on the medical front, the potential for exporting to other markets or establishing a partnership on a local basis and produce domestically, in country, is there and very real and in markets that are substantially larger than ours,” Stanley said.

For example, MedReleaf (TSX:LEAF) in August completed its first international export of medical cannabis oil to Brazil, Canopy Growth in September signed a supply license agreement to Spain and a strategic partnership in the Danish market, while Aurora Cannabis shipped its first 50 kilograms of dried cannabis flower to Germany through its subsidiary in September.

Shares of Aurora (TSX:ACB) shot up more than 28 per cent Monday on the back of its earnings last week that showed a 169 per cent jump in revenues in the quarter ended Sept. 30, and $1.2 million in sales of dried cannabis in Germany, said Chris Damas, the author of the BCMI report.

There has been much talk about the potential for international sales from Canadian licensed marijuana producers, but Aurora’s disclosure was the first to quantify them, he said.

“These companies are really attacking the export markets… That is really where the growth is going to be. I think most companies and analysts too have come down in their expectations for domestic sales,” Damas said.

He noted that the distribution plan for recreational cannabis in Ontario, the largest market, with 40 stores initially is unlikely to support the kind of growth these companies seek.

However, the ripple effect of marijuana exports on the domestic supply of the drug is unclear.

MedReleaf chief executive Neil Closner told analysts on its second-quarter earnings call that it is there is likely to be more demand than supply when recreational pot is legal.

“We may have to make difficult decisions on which markets we initially support and where we allocate our products,” he said on Monday.

Stanley says the ongoing medical cannabis shortage is likely to persist in the near term. But with Health Canada ramping up approvals of new licensed producers, to 73 currently, up from 38 at the end of January, the gap is likely to close in the medium and long term, he said.

“Whatever supply shortage that we see in the near term, the market’s going to iron them out, ” Stanley said. “Because the single biggest barrier to ironing them out is really no longer much of a barrier.”

Just Posted

Rebels drop home opener to Oil Kings

The Edmonton Oil Kings were simply better than the Red Deer Rebels… Continue reading

Diesel spilled in Penhold neighbourhood

Penhold Fire Department responded

House fire in Penhold

Damage estimated at $30,000

Red Deer Players host play reading for public

Audience feedback for playwright

Sylvan Lake cleanup cancelled

Weather prompts cancellation

RDC Kings topple Medicine Hat College Rattlers

Kings Matheus Alves scores twice in the win

Nurse leads Canada over South Korea 82-63 at FIBA Women’s World Cup

TENERIFE, Spain — Kia Nurse poured in 29 points to lift Canada… Continue reading

Aretha Franklin exhibit debuts with eye toward her legacy

DETROIT — The Detroit museum that hosted Aretha Franklin’s public visitations after… Continue reading

‘Anaana’s Tent’ passes Inuit songs, legends, language to a new generation

In Pangnirtung, Nunavut, on the eastern tip of Baffin Island, Rita Claire… Continue reading

Housing data decision opens door to real estate innovation, say realtors

TORONTO — Realtor Daniel Steinfeld has wanted to post home sales data… Continue reading

Ty Long kicks winning field goal, Lions come back to beat Ticats in OT

VANCOUVER — Ty Long was eager for a special moment, and he… Continue reading

Indigenous eateries take centre stage in Canada thanks to increasing awareness

VANCOUVER — Since Paul Natrall started serving Indigenous cuisine from his Mr.… Continue reading

Canada’s capital region reeling after intense tornado rips through communities

OTTAWA — Parts of Canada’s national capital were still reeling Saturday after… Continue reading

Coaches, players on Alberta university rugby team buckle up for the Broncos

LETHBRIDGE, Alta. — The head coach of the University of Lethbridge Pronghorns… Continue reading

Most Read